2018-Early-College-Planning-webinar

EARLY COLLEGE PLANNING MASSACHUSETTS EDUCATIONAL FINANCING AUTHORITY About MEFA •Not-for-profit state authority created in 1982 •Helping families plan, save, and pay for college •Keepin

EARLY COLLEGE

PLANNING

MASSACHUSETTS EDUCATIONAL FINANCING AUTHORITY

About MEFA

•Not-for-profit state authority created in 1982

•Helping families plan, save, and pay for college

•Keeping you on track with college planning:

–mefa.org: Information, blog, tools, & resources

–Facebook, Twitter, & LinkedIn

–Emails: Sign up on mefa.org:

–Seminars: Details at mefa.org/events

–Webinars: Register at mefa.org/events

–mefapathway.org

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Agenda

•College is an important investment

•How much might college cost for my family

•Strategies for saving

•Two Massachusetts savings options: U.Fund and U.Plan

•What can students and parents do right now to prepare

Source: College Board Trends in Higher Education Series Education Pays 2016

Current college costs by type

5 Source: Trends in College Pricing, 2017 The College Board

What is Financial Aid?

•Money to help students pay for college

•3 main types

–Grants and scholarships (gift aid)

–Work-Study

–Student Loans

Merit-Based Aid

•Awarded in recognition of student achievements

(academic, artistic, athletic, etc.)

•Criteria differs from school to school

•Often has requirements for renewal

Need-Based Aid

•Awarded based on family’s financial eligibility

•Determined by standardized formula

•Includes most federal, state, and institutional (college) aid

Financial Aid Breakdown

•Undergraduate Student Aid 2016-17 ($181.1 Billion)

Federal

Student

Loans

32%

Federal Work-Study 1%

Federal Grants 21%

Institutional Grants &

Scholarships 25%

Private Grants 6%

Federal Tax Credits 9%

State Grants 6%

Source: The College Board, Trends in Student Aid 2017

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Understanding College Affordability

What is the real cost to you as a family?

• Expected Family Contribution (EFC) Calculator: CollegeBoard.org

• Net price calculators on college websites

• College Navigator: CollegeNavigator.gov

• College Scorecard: CollegeScorecard.ed.gov

• MEFA’s College Cost Forecaster

Net Price Calculator on Each College’s Website

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Paying for College in MA: You Have Options

•Tuition Break

– Reduction on out-of-state tuition costs at New England schools

– For programs not offered in your home state

•MassTransfer: Gen Ed Foundation

– Guaranteed credit transfer from community college to 4-yr public MA school

•MassTransfer: A2B Degree

– Guaranteed credit transfer from community college to 4-yr public MA school

– No application fee or essay

– Guaranteed admission and tuition credit based on GPA

•MassTransfer: A2B & Commonwealth Commitment

– Guaranteed credit transfer from community college to 4-yr public MA school

• Financial Aid

• Past Income

–Savings

–Other Assets

• Present Income

–Salary (Payment Plans)

• Future Income

–Parent Loans

–Student Loans

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Saving vs Borrowing

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*Based on 10 years at an interest rate of 7%

This example is an estimate only and market conditions may change.

Myths We’ve Heard About Saving for College

“Saving for college means no financial aid.”

“It’s not worth saving for college if I can’t

save the entire cost.”

The TRUTH: Income is the biggest factor in determining

financial aid eligibility, not savings Your savings will help you

when it comes time to pay for college

Based on 2017-18 Federal Methodology

Combined

Parent Income $75,000 $75,000 $75,000

Combined

Parent Assets $0 $75,000 $150,000

An example: 4 in the family, 1 child in college:

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Combined

Parent Income $75,000 $100,000 $150,000

Combined

Parent Assets $50,000 $50,000 $50,000

Based on 2017-18 Federal Methodology

An example: 4 in the family, 1 child in college:

Income Impact on EFC

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Your College Savings Will Help You

• Give you more education options

– Different types of colleges

– Special programs such as study abroad

• Reduce or eliminate the need to borrow loans

• Allow the student to work less and study more

• Have a minimum impact on aid eligibility

Kyle wants to attend a four-year public school to study business The full annual cost of the school is

$22,500

Kyle’s Financial Aid Award Grants & Scholarships* $13,000 Federal Work-Study $2,000

Kyle’s family will need to pay $2,000

out of pocket each year of college

Lisa wants to attend a four-year private school to

study nursing The full annual cost of the school is

$60,000

Lisa’s Financial Aid Award Merit Scholarship $20,000

Lisa’s family will need to pay $32,500

out of pocket each year of college

Another Example: Case Study #2

Strategies for Saving

• Start saving as early as possible

Use time to your advantage

• Use automatic transfers

• Get the word out and let your

family and friends know that they

may contribute or open a plan

on behalf of your child

• Involve your child in the process

New for 2017! State Income Tax Deduction:

$1,000 for single filers and $2,000 for joint filers

The U.Plan Prepaid Tuition Program

How the U.Plan works:

•Allows you to prepay up to 100% of tuition & mandatory fees at a large

network of MA public and private colleges & universities

•By purchasing Tuition Certificates now, you lock in today’s tuition and

mandatory fee rates

•U.Plan Tuition Certificates:

• Represent interest in Commonwealth General Obligation Bonds

• Are backed by the full faith and credit of the Commonwealth of MA

• Are not subject to market fluctuation

• Require $300 minimum to get started

•Annual enrollment period: May 1st to June 30th

To learn more about the U.Plan visit mefa.org/uplan

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Established in 1995

Established in 1999

U.Fund 529 College Investing Plan

How the U.Fund works:

• Save for qualified higher education expenses

– Tuition, fees, room, board, books, supplies, and equipment

• Savings can be used at any accredited college or university nation wide

• Minimum Initial Investment: $50 lump sum or $15/monthly automatic investments

• Combined Account Maximum: $375,000

• No Annual Account Maintenance Fee

• Multiple investment options

– Active management, indexed portfolio, individual allocation portfolios, FDIC

insured

American International College

Amherst College

Anna Maria College

Art Institute of Boston at Lesley University

Assumption College

Babson College

Bay Path College

Benjamin Franklin Institute of Technology

Bentley College

Berklee College of Music

Berkshire Community College

Boston College

Boston University

Bridgewater State University

Bristol Community College

Bunker Hill Community College

Cape Cod Community College

Clark University

College of Our Lady of the Elms

College of the Holy Cross

Curry College

Dean College

Eastern Nazarene College

Emerson College

Emmanuel College

Endicott College

Fisher College Fitchburg State University Framingham State University Gordon College Greenfield Community College Hampshire College Hebrew College Hellenic College Holyoke Community College Laboure College Lasell College Lesley University Massachusetts Bay Community College Massachusetts College of Art and Design Massachusetts College of Liberal Arts Massachusetts Maritime Academy Massasoit Community College Merrimack College Middlesex Community College Montserrat College of Art Mount Holyoke College Mount Ida College Mount W achusett Community College New England Conservatory of Music Newbury College Nichols College

North Shore Community College Northeastern University Northern Essex Community College Pine Manor College Quinsigamond Community College Regis College Roxbury Community College Salem State University Simmons College Smith College Springfield College Springfield Technical Community College Stonehill College University of Massachusetts Amherst University of Massachusetts Boston University of Massachusetts Dartmouth University of Massachusetts Lowell

W ellesley College

W entworth Institute of Technology

W estern New England University

W estfield State University

W heaton College

W heelock College

W orcester Polytechnic Institute

W orcester State University

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Saving for College Tax Benefits

•Contributions to the U.Plan and U.Fund are tax deductible

•Tax deduction will continue through 2021

– Up to $2,000 in payments for married filers

– Up to $1,000 in payments for individual filers

•Limits are per filer, not per account

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MEFA’s College Planning Tool

Create a personal strategy to pay for your child’s higher education costs:

• Record your current college savings

FREE college and career planning tool

Resources include:

–Skills and interests assessments

–Career exploration

–College search

–Financial aid and scholarship information

–Personalized digital portfolio

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What To Do Now

•Start (or continue) saving

•Talk to your child about college

•Use online tools to learn more about college cost

•Join MEFA’s email community at mefa.org

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Questions or Comments?

Presenter:

Jonathan Hughes

mefa.org info@mefa.org (800) 449-MEFA (6332)